Nurturing growth at Nest Wealth

“We were looking for a media partner that was going to help facilitate that level of awareness,” says Cass, “and Metroland is an exceptional partner for that.”

In terms of advertising, the deal allows Nest Wealth to promote its brand both digitally and in traditional print across the more than 100 weekly and daily newspapers owned by Metroland and on the media company’s various websites, which are visited by a total of more that eight million people monthly. As well, Nest Wealth is likely to have access to media properties owned by Metroland’s parent company, TorStar Corp., which includes the Toronto Star, although there is no formal agreement on this point as yet.

Cass will be contributing to Metroland’s media outlets with a weekly column called “Wealth Matters,” which was launched at the end of July. This contribution also is beneficial to Metroland as content for the media chain’s many titles.

Advertising is important for robo-advisor companies, says Mark Yamada, president and CEO of PUR Investing Inc. in Toronto, because they need to connect directly to investors.

“One thing we’ve come to discover [while] watching the robo-advisor space in the U.S. is that this is very much a consumer product,” says Yamada. “So, advertising and marketing becomes even more important than [for] most financial services.”

But advertising is not the only thing that Nest Wealth gets from this deal. The $1.5 million will help the digital advice provider to build its technology infrastructure and expansion plans. In September, Nest Wealth launched a new “onboarding” platform that simplifies how investors open accounts. As well, Nest Wealth will be looking to add to its team of employees.

“These are things that have been made possible by the strategic investment and support of Metroland,” says Cass, “and also things that have been [required] by the level of demand and interest that we’re seeing [from] clients.”

Metroland’s investment also will help Nest Wealth in its plans to expand outside the province of Ontario. Says Cass: “Our goal is to bring the service to as many Canadians as possible who feel like they want a way to invest that is transparent, that is equitable, that allows them to keep as much of their money in their pockets as possible and that doesn’t charge in the traditional way of taking a cut of every dollar they put into the account.”

Nest Wealth’s average client is between 30 and 65 years old and has an account size in the six- figure range.

For Metroland, the deal is a chance to diversify its holdings beyond traditional print media for a potentially lucrative return.

“As a company that’s evolving from a traditional medium and getting more of our products, more of our revenues, more of our services, outside of traditional newspapers, this provided a good opportunity for us,” says Michelle Digulla, Metroland’s vice president of marketing.

According to Digulla, the robo-advisor market piqued the interest of Metroland because of the growth that these emerging financial advice providers have experienced in the U.S.

Client assets under management held by 12 U.S.-based digital advisor startups jumped to more than US$8 billion in the first half of 2015, up from US$5 billion in 2014, according to Aite Group, a Boston-based research firm.

The Nest Wealth/Metroland partnership makes sense for both parties, says Yamada, given the changing nature of how people are accessing media and financial services alike. “All the major providers of print media are madly searching for alternatives [for] distribution,” he says, “just as traditional asset managers are looking for new forms of distributions for their products.”

Cass is not ruling out further investments by Metroland or other businesses – including financial services institutions: “We will always be open to strategic relationships that allow us to maintain our independence and allow us to do what’s best in the interest of the Canadian consumer. And we continue to get approached by companies that are interested in doing those two things.”

In recent months, there have been other investments by outside firms in the fledgling robo-advisors business. Most notably, in April, Montreal-based Power Financial Corp. announced its investment of up to $30 million in Toronto-based robo-advisor Wealthsimple Financial Inc. The robo-advisor plans to use that boost in capital to expand its staff to 25 to 30 employees by the end of the year – up from 12 at the time of the announcement – and to bolster Wealthsimple’s resources for French-speaking clients.

© 2015 Investment Executive. All rights reserved.